The managers huddled to see if they had won or lost. Did the new process from 2 months before yield data showing a reduction in cost? Or was it merely a matter of chance… Too soon to do the data dance?   So they set about the business of crafting a hypothesis test

MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
Section: Chapter Questions
Problem 1P
icon
Related questions
Question
  1. “Type I Error Blues,” by David Stein

The managers huddled to see if they had won or lost.

Did the new process from 2 months before yield data showing a reduction in cost?

Or was it merely a matter of chance…

Too soon to do the data dance?

 

So they set about the business of crafting a hypothesis test

In order to conclude which process was best.

With the null hypothesis meaning “status quo”, no change evident

They quickly concluded H0 could not stand, as was their true intent.

 

Just one month later, they realized their grave mistake!

A Type II error would have been so much safer, for goodness sake.

Alas, their final huddle was a sad one with HR Director Bob.

He told them to go back to training school as each was now in need of a new job.

 

  1. What was the likely managerial mood and outcome on the days immediately following the (erroneous) conclusion to reject this null hypothesis?
  2. What would have been the likely managerial mood and outcome on the days immediately following an (erroneous) conclusion not to reject the null hypothesis?
  3. In the presence of a Type II Error, what do you suppose would have happened to their cost reduction/process improvement efforts 3-6 months down the road? Please explain in everyday English.
Expert Solution
Step 1

State the null and alternative Hypotheses:

 

Null Hypothesis:

 

H0: There is no change in the cost due to new process.

 

Alternative Hypothesis:

 

H1: There is a reduction in cost due to new process.

steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Point Estimation, Limit Theorems, Approximations, and Bounds
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, statistics and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
MATLAB: An Introduction with Applications
MATLAB: An Introduction with Applications
Statistics
ISBN:
9781119256830
Author:
Amos Gilat
Publisher:
John Wiley & Sons Inc
Probability and Statistics for Engineering and th…
Probability and Statistics for Engineering and th…
Statistics
ISBN:
9781305251809
Author:
Jay L. Devore
Publisher:
Cengage Learning
Statistics for The Behavioral Sciences (MindTap C…
Statistics for The Behavioral Sciences (MindTap C…
Statistics
ISBN:
9781305504912
Author:
Frederick J Gravetter, Larry B. Wallnau
Publisher:
Cengage Learning
Elementary Statistics: Picturing the World (7th E…
Elementary Statistics: Picturing the World (7th E…
Statistics
ISBN:
9780134683416
Author:
Ron Larson, Betsy Farber
Publisher:
PEARSON
The Basic Practice of Statistics
The Basic Practice of Statistics
Statistics
ISBN:
9781319042578
Author:
David S. Moore, William I. Notz, Michael A. Fligner
Publisher:
W. H. Freeman
Introduction to the Practice of Statistics
Introduction to the Practice of Statistics
Statistics
ISBN:
9781319013387
Author:
David S. Moore, George P. McCabe, Bruce A. Craig
Publisher:
W. H. Freeman